community wealth building in cleveland through anchor institutions purchasing and cooperative...
TRANSCRIPT
Community Wealth Building In Cleveland Through Anchor Institutions Purchasing And Cooperative Development
Montréal, Quebec Global Social Economy Forum
7 September 2016
Tracey Nichols, Director, Economic Development City of Cleveland, Ohio, United States Steve Dubb, Senior Fellow The Democracy Collaborative
Evergreen Cooperatives
TOTAL EMPLOYMENT: 119
CLEVELAND RESIDENTS: 99 (83%)
MINORITIES: 100 (84%)
COMMUNITY RE-ENTRY: 47 (39%)
COOPERATIVE MEMBERS: 31 (26%)
Governance Structure
Evergreen Business Services
Evergreen Cooperative Corporation Evergreen
Cooperative Development Fund
Evergreen Real Estate Corp.
Evergreen Energy Solutions
Green City Growers
Evergreen Cooperative
Laundry
Co-Op 4
Co-Op 5
EBS Board
Individual Co-op Boards
Why did the partners come together in Cleveland? • Large areas of City of Cleveland living in poverty
• Mayor Jackson interested in possible solutions
• 2005-Greater University Circle Initiative (GUCI)-Working with the Anchors to create wealth and assets for low income individuals in the surrounding community
• Created a basis for continued conversations about economic inclusion
• Cleveland Foundation led the effort/interest in cooperatives
Is place-based
Emphasizes equity and inclusion
Promotes local ownership and control
Creates and anchors living wage jobs
Keeps wealth local
Builds “ecosystem” & institutions of support
Leverages local assets
The Community Wealth Building approach
Criteria for Business Selection 1) Potential for sustainable profitability.
2) Short payback period.
3) High level of local job creation.
4) Low barriers to entry for workforce.
5) Active engagement of multiple anchors (i.e., preference for a business that meets the procurement needs of multiple institutions).
6) Potential to improve family living standards.
7) Ability to generate community wealth.
8) Potential for business growth.
Setting the Conditions for Co-op Success
1) System for screening employees
2) Life skills training
3) Management training (coaching supervision model)
4) Co-op governance training
5) Business-specific training
6) Learning what it means to be a business owner
What was the government role in Cleveland? • Government funding
• Banks Would Not Fund A Start-Up
• City/Federal funds could leverage New Markets Tax Credits
• City created strong project reserves to reduce risk- greenhouse required a “workout” & reserves saved the project
• Requested Public benefit waiver from Federal government
• Zoning and land assembly • City had available landbank land for projects & funding to acquire
remaining parcels using Federal Uniform Relocation Act
• City assisted with expedited zoning and permitting
Other inclusion efforts in Cleveland • Community Benefits
• City has a long history of economic inclusion for City funded projects via codified ordinances passed by City Council
• What if we asked other organizations to follow suit? Hire local and Contract local to support our community?
• University Hospitals leads the way; Other Anchors, Institutions and even a developer follow
• Supply Chain • University Hospitals required supplier company (Owens Minor) to
move to City – creates City jobs and investment in neighborhoods
• City helped with site selection, incentives
Business Challenges
1) Anchor contracts were hard to secure.
2) Businesses were not always well designed to meet anchor needs (e.g., lack of processing facilities at Green City Growers).
3) Competition with unions limited the kinds of jobs that Evergreen Energy Solutions could bid for.
4) Insufficient operational systems existed at launch (e.g., back office, manager and worker training).
Building in Other Cities
What was unique about Cleveland?
1) Foundation led
2) Represented first large-scale U.S. philanthropic use of co-ops as part of urban development strategy
3) Had high profile (e.g., media, political attention)
4) Prioritized capital-intensive businesses (laundry US $5.7M, greenhouse US $16M)
5) Used complex financing (Section 108, New Markets)
6) Launch of first two businesses preceded development of overall structure (i.e., Foundation incubation, 2009-2012)
Richmond, VA and Rochester, NY: What’s different?
1) Co-ops are now part of the community development landscape—no longer completely novel
2) Public launch from the get-go: City Council-led
3) Less direct philanthropic involvement
4) Far less available capital than in Cleveland
5) Desire to invest in infrastructure first
6) Broader strategy also envisions conversions of existing businesses to employee ownership
7) Different kinds of business ideas emerging
1. Local Food Processing Facility 2. Workforce Transportation Provider/Shuttle 3. Green Construction Company (LED, solar, refer.) 4. Cooperative of Independent Childcare Centers
Richmond, Virginia
1. Community health worker business 2. Property maintenance business (turnover of units,
grounds maintenance) 3. Construction finishing business
Emerging Business Ideas
Rochester, New York
Current Challenges and Opportunities “In past decades, the overarching trend has been where
we might have seen people use worker co-ops to exit the economy and create an alternative for themselves. Now, we are really seeing people using the form to enter the economy. And that is a substantial difference, which has huge implications for how we develop support in the
form of capital, technical assistance and policy.”
Melissa Hoover, Democracy at Work Institute Co-op Issues Forum, Washington, DC, USA, May 4, 2016
”
Tracey Nichols
Director of Economic Development City of Cleveland
Steve Dubb
Senior Fellow
Democracy Collaborative
Thank you!